Ranked #1 ranked tech industry analysts in the U.S., U.K., and Europe (Apollo Research January, 2014) and one of the most cited tech analysts in the world. Disruptive consumer technologies and usage models are what really change the landscape. They determine the tech losers and winners and that's what I will be covering. I am Founder and President of Moor Insights & Strategy, an independent technology analyst firm that has been cited as experts globally in the media. Unique to the analyst business, I actually worked for high tech companies for 21 years leading strategy, products, and marketing for AT&T ('90), Compaq ('95), AltaVista ('99) and Advanced Micro Devices ('01). I departed AMD in 2011 where I served as Corporate Vice President and Corporate Fellow in the strategy group. There, I developed long-term strategies for mobile computing devices and personal computers.

Cisco's Challenge To Remain Relevant In SDN

Software Defined Networking (SDN) is viewed as a technology that will fundamentally change how networking is approached, and as the leading networking products vendor, Cisco has more to lose than anyone else if SDN is successful and has more to gain than anyone else if it is not. While they have an aggressive plan to embrace SDN, they also have the best motivation for maintaining the status quo. How this plays out in the end depends on how SDN fares in the market overall and how deeply Cisco is actually willing to dive into providing solutions. While we have written an extensive analysis here, I wanted to net out Cisco’s chances in SDN in this column.

Networking today is characterized by multiple tiers of switches and routers that distribute information to servers and client devices. The core routers sit at the heart of the data center and have the main control over the distribution of information. In the networking hierarchy data moves from the core to other “leaf switches”, first at the end of every row (EOR) of racks in the data center, then on to the switches at the top of each of the racks (TOR). Cisco owns roughly 65% of the core routing market, more than double the next closest competitor, Juniper. The core is the most profitable business, but the EOR and TOR businesses also contribute to the business, not only from a profit perspective, but more importantly from a volume and revenue perspective. Control the core and you have better control over what happens at the row and rack level.

Earlier this year Cisco announced its Cisco Open Network Environment (Cisco ONE) and the juxtaposition of the word “open” in a Cisco announcement has caused plenty of head scratching. Cisco prides itself on its technologies and is not necessarily one to push an open source standard; their business model is about captive customers and sunk investments that create a barrier for customers who want to switch to competing technologies. This is not to say that Cisco does not have great products; they would not be where they are today without great technology, but, it does say that they have an incentive to keep things proprietary. When Cisco claimed that they were introducing “the industry’s most extensible open networking fabric,” that news was met with some skepticism.

Cisco ONE is a very broad strategy that encompasses a wide range of networking functions. Obviously they are staking their claim in SDN and trying to not fall into the same mistakes that they have made in the past of leaving areas of value uncovered that allowed companies like F5 or Riverbed to carve out a niche for themselves.

As Cisco tries to bring this strategy together, they have a huge challenge ahead of them. With 3 different operating systems (IOS, IOS-XR and NX-OS) that are all differing technologies that have different release cycle cadences, the software that Cisco is eyeing to bring to the market will need to comprehend all of these and somehow tie the release cycles together – or be constantly updating, which is not acceptable to customers who relish stability and longevity in releases.

In understanding how Cisco will fare in the SDN market, it is easiest to dissect the situation and break out a standard SWOT analysis to look at their Strengths, Weaknesses, Opportunities and Threats.

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